Applying for a business credit is similar to applying for a personal credit card. Ideally, you would apply for the card without using your SSN and avoid making a personal guarantee. But unless you have a significant business credit history, the issuer is likely going to require that you personally guarantee the credit card account. Business credit cards are an essential tool in managing your business expenses. You do not want to co-mingle your personal and business expenses for any reason. It will be a nightmare when it's time to prepare your taxes.
Higher Credit Limits
Business credit cards typically have higher credit limits than personal credit cards making it easier to use the card for major business expenses. It's not uncommon to see cards with a $50,000 - $100,000 credit limit.
Build Business Credit
A personal credit card generally can not help you build business credit, though your business and personal credit may be linked. Using a business credit card and paying the bill on time is one way to help build your business's credit. Your business credit can impact your business&'s ability to qualify for loans, credit lines, terms from vendors and equipment or office leases. Your business credit can also impact how much you will pay for business insurance. If you are a sole proprietor, your personal credit may also be considered when you apply for business-related financial products. Opening and using a business credit card is a great way to build business credit.
Separate Business Credit
Why should you be concerned about keeping your business and personal finances separate? Legal liability, easy bookkeeping, and good financial hygiene—both for you and your business alike. Establishing a financial firewall between you and your business (even if your business is just you on your own!) is pivotal for your own protection and sanity come tax time. And, above all, seriously important for protecting your personal assets. If you intermingle your personal expenses and business expenses, you could ultimately lose the very legal protection you hoped to gain by incorporating or organizing a limited liability company.
Business credit cards often offer similar benefits, but they are tailored to the needs of business owners. For example, your card could come with:
If you choose a business card with a provider that has a wide range of products that serve businesses, it can be the start of a strong financial relationship. Banks offer many business credit products and financial services that meet small business needs no matter where they are in the lifecycle of their business. Some business credit cards offer extended working capital and simplifies the management of everyday financial transactions.
Business-specific rewards programs. You could get a card that offers cash back rewards on shipping, advertising and other common business purchases.
Free employee cards. You can give your employees a card so they can easily make purchases on the business&'s behalf. You can monitor their spending and control where they can use the card and how much they spend.